What is FPO (Follow-on Public Offering) ?

Indian IPO Market offering several FPO’s these days as government has a plan to disinvest its holding in profitable PSUs and raise funds over Rs 40,000 crore out of this. These FPOs are somewhat different from IPOs. As we know that IPOs are Initial Public Offering, similarly FPOs are Follow-on Public Offering means an existing company listed in market offers shares to the public for raising further money or disinvests its holding to raise money. It is also known as secondary offering.

Investopedia explains Follow-on Public Offering (FPO) as follows :-FPOs are popular methods for companies to raise additional equity capital in the capital markets through a stock issue. Public companies can also take advantage of an FPO issuing an offer for sale to investors, which is made through an offer document. FPOs should not be confused with IPOs, as IPOs are the initial prblic offering of equity to the public while FPOs are supplemantary issues made after a company has been established on an exchange.

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